TCS to Slash Over 12,000 Jobs in FY26, Targets Mid and Senior Management

Tata Consultancy Services (TCS) has announced plans to lay off 12,000 employees this year, creating shockwaves throughout India’s IT industry.

If implemented, this would mark the largest mass layoff in the history of both the company and the sector.

According to a PTI report, the layoffs will primarily affect mid and senior-level staff, pointing to a strategic workforce restructuring aimed at making the company “future-ready.”

Mid-Level Workforce Most at Risk

India’s mid-level IT professionals, especially those in high-cost, non-billable positions, now face increased vulnerability. In a rapidly evolving tech landscape driven by automation and cost-efficiency, these roles are often the first to be eliminated.

Sources say TCS initiated discreet layoffs in early July, targeting employees aged between 24 and 55 across its offices in Bengaluru, London, and Princeton.

Around one-third of those laid off were on the bench without active assignments, while others were removed from ongoing projects, based on internal evaluations by business unit heads.

The layoffs are expected to save the company up to Rs 3,000 crore, given the average annual salary of Rs 25 lakh for the affected employees.

However, this decision has raised internal questions, especially as TCS had earlier declared a substantial Rs 50,000 crore dividend payout this year.

Company Defends Strategic Move

TCS has justified the decision as part of its long-term vision to become a “Future-Ready organisation.”

Yet, the implications are clear: the traditional mid-tier structure of India’s IT workforce is being dismantled. This move could be a precursor to a broader trend in the industry.

IT Ministry and NITES Step In

The Ministry of Electronics and Information Technology (MeitY) is closely monitoring the situation.

The Nascent Information Technology Employees Senate (NITES) has approached Union Labour and Employment Minister Mansukh Mandaviya, requesting that the government issue a notice to TCS for clarification.

NITES has condemned the layoffs, calling them unethical, inhumane, and illegal. “The law clearly states that no employee who has served for over a year can be retrenched unless the company provides one month’s notice or wages in lieu, pays statutory retrenchment compensation, and notifies the government. TCS has not complied with any of these legal requirements,” NITES alleged.

Stock Market Impact and Industry Trends

Following the layoff announcement, TCS shares dipped, affecting the entire IT sector. Wipro, HCL Technologies, and Infosys also saw declines of up to 2%, pulling the Nifty IT index down by over 1%.

IT stocks have struggled recently amid global macroeconomic uncertainty and geopolitical instability.

Analysts view TCS’s move not just as a cost-saving measure but as a response to deeper changes triggered by artificial intelligence and declining global demand.

“TCS’ decision to layoff ~12,200 employees, which is ~2% of its global workforce during FY26 is reflation of both cost optimisation measures and deeper industry challenges. Shifting technology demands can be also a major reason for the layoff,” said Rajesh Sinha, Senior Research Analyst at Bonanza.

TCS maintains that the move is not AI-driven nor an immediate cost-cutting tactic. However, Sinha believes it reflects the mounting pressure to maintain competitiveness amidst tighter budgets and increased pricing challenges.

“Growing requirement of automation and evolving client expectations are reshaping workforce structures, forcing companies like TCS to rebalance employee costs and skill sets to maintain margins and becoming ‘future-ready’ through skill re-alignment,” he added.

Company Performance and Strategic Outlook

During the June quarter, TCS recorded consolidated sales of ₹63,437 crore, a 1.3% increase that missed analyst projections of ₹64,666 crore, according to LSEG data.

Four out of six business verticals reported lower year-on-year revenues. However, banking and financial services saw a 1% rise, and technology services grew by 1.8%, according to a Reuters report.

TCS’s total order bookings stood at $9.4 billion for the quarter, compared to $12.2 billion in the previous quarter and $8.3 billion during the same period last year.

Managing Director and CEO K Krithivasan attributed the company’s challenges to continued macroeconomic and geopolitical uncertainties, ruling out the possibility of double-digit growth in FY26.

Broader Sector Implications

According to Harshal Dasani, Business Head at INVasset PMS, the layoffs reflect a broader strategic shift in Indian IT. “This move signals a broader shift in Indian IT — away from headcount-led growth toward efficiency and AI-led delivery models,” said Dasani.

He believes this realignment is more about future-readiness than distress, aligning with a need for operational agility in a lower-growth environment.

Investor Outlook and Risks

Rajesh Sinha noted that while the layoffs may apply short-term pressure on IT stock prices, long-term prospects remain intact, driven by the sector’s growth potential.

Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, echoed this sentiment. He views the restructuring as a move to improve execution and margins in the coming quarters. However, he cautioned that a rise in attrition or failure to improve employee utilisation could pose risks.